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Transportation: Following the Money

Raising money for any transportation project, but particularly rail passenger service is always difficult. Adding to the difficulties are the high price tags for many rail projects. Already there is increasing concern about the price tag for the California High Speed Rail project. There are estimates of 6 billion dollars for construction for just 34 miles between Anaheim and Los Angeles. Such a short segment will provide limited service but is being considered for the first leg to have passenger service. Have we seen this before?

Most organizations to some degree create empires. The bigger and more expensive the project the greater the bureaucratic empire created. Involved with this are the many contractors and consulting firms working on such projects. The bigger and more expensive the project, the more money they make. Also as mini-empires organizations treat other transportation service providers as competition for funding instead of as partners. What gets lost in all of this is the point of any project: serving the public in the best way possible.

In the 1950’s and 60’s there were many expensive fully graded separated “Rapid Transit” projects proposed across the country. At the same time existing streetcar, interurban and local rail services were being shut down for lack of government support. While the many “Rapid Transit” projects kept consultants and planners busy most never got beyond the proposal stage. Those that did get built often were mired in cost overruns and delays. Among many transit supporters came the term “goldplating” to describe overbuilt projects that underserved the needs of the public. In reaction to “goldplating” there arose the Light Rail movement and the rebirth of commuter rail in the 1970’s and 80’s. These new services were able to provide expanded service at the lowest possible capital cost. The inspiration for modern Light Rail came form the experience of Frankfurt, Germany. In the late 1950’s Frankfurt was studying what to do about its local transit. Frankfurt looked at building a full subway system, monorail or upgrading their existing streetcar system. Frankfurt officials discovered that upgrading their streetcar system would attract the most passengers. The reason was in terms of travel time an upgraded streetcar system was faster for most passengers than subway or monorail. The upgraded streetcar system was more extensive, more direct and required fewer transfers than subway or monorail. Frankfurt today has many miles of subway. But the same trains also travel outside of the city core on the surface in private medians which have replaced the old streetcar tracks. The Red Line subway in Los Angeles has come a long way in ridership since it opened in the 1990’s. But the increase in ridership came as the service added route miles and from connections to light rail lines such as the Blue Line from Long Beach, the Gold Line from East Los Angels and Pasadena as well as the busway Orange Line across the San Fernando Valley.

Speaking of money and transportation, we just went through another tax season last month. What does your Federal Taxes pay for? The Federal Budget is now just over 3 trillion dollars. Of that just over half, 1.6 trillion dollars is spent for items related to military spending. There is 700 billion for the Defense Department. Another 200 billion is needed for operations in Iraq and Afghanistan. The Veteran Administration is budgeted for 100 billion while 94 billion is for military spending outside of the Defense Department. And 400 billion each year is the cost paid on the interest run up on the national debt due to military spending. Social Security will cost this year 695 billion, Medicare 453 billion, and Medicaid 290 billion dollars. The budget for the Department of Transportation is 72.5 billion.

So where are our taxes coming from? Not from Exxon Mobil, Chevron, General Electric or Bank of American at least in this country. Exxon Mobil was the most profitable corporation in the world last year with profits of 45.2 billion dollars. Exxon Mobil did pay 15 billion dollars income taxes overseas but not one penny went to the IRS. The 6 most profitable companies in the world are all oil companies. Large corporations can reduce their taxes because they can deduct taxes paid overseas from their American taxes. Also they report most of their profits overseas in countries with low tax rates and their losses in this county.

When we look at who pays taxes, the answer would be you if you have a job. Individual Income Taxes paid came to 1.061 trillion dollars. Another 940 billion dollars was paid in payroll taxes for Social Security and Medicare. Those corporations that did pay Income Tax paid the IRS 222 billion dollars. When large profitable corporation pay no income tax, they are being subsidized by the taxpayer. This is all legal, but then the large corporations, particularly the Oil companies spend millions to lobby congress for tax breaks. In addition Oil Companies spend a great deal for advertising which gives them a great deal of clout with the media. The largest contributors of many “Think Tanks” and foundations critical of government regulations and Income Taxes come from the Oil Industry and their shareholders.

If we look at the defense budget, most of our non-nuclear forces are dedicated since the mid-1970’s to insuring that the flow of oil world wide is not disrupted. Even though Afghanistan doesn’t have oil, it is possible to run oil and gas pipelines through it from the Caspian Sea bypassing the need to run pipelines through Iran or Russia. The Caspian Sea has the 2nd largest oil reserves after the Persian Gulf region. You are paying much more for gasoline than 3 dollars a gallon today, even if you don’t own a car.